How did Texas tax septic-tank cleaning, grease-trap cleaning, waste hauling, and municipal dumping or landfill fees?

Plain-English summary

A provider cleaned septic tanks and grease traps, transported the waste, and included city dumping or landfill fees in a lump-sum customer charge.

Septic-tank cleaning was not taxable for either residential or business customers. The provider did not charge tax on the cleaning, waste transportation, or the City of McAllen's sewer dumping fee. The city's septic-material dumping charge also was nontaxable, and no resale or exemption certificate was needed.

Cleaning a nonresidential grease trap connected to a sewer line was taxable real-property repair unless it qualified as scheduled periodic maintenance under Rule 3.357(a)(3). Qualifying maintenance was nontaxable, although the provider paid tax on taxable items used. Cleaning a clog did not qualify as maintenance.

Cleaning an enclosed grease trap not connected to the sewer line was taxable under Rule 3.356 even when scheduled and periodic. For taxable grease-trap work, the total charge—including cleaning, transportation, and the included dumping fee—was taxable.

A fee paid merely to dump grease-trap waste at a landfill was nontaxable and needed no certificate. The dumping fee was taxable if the city first collected the waste at its facility and later moved it to a landfill.

Common questions

Was septic-tank cleaning taxable? No, for either homes or businesses.

Could sewer-connected grease-trap cleaning be exempt maintenance? Yes, if it was scheduled periodic work.

Did that maintenance exception apply to an enclosed off-line trap? No.

Was a direct landfill dumping fee taxable? No, under the facts stated.

Citations and references

• 34 Tex. Admin. Code Rule 3.357(a)(3)
• 34 Tex. Admin. Code Rule 3.356

Source

• STAR search: https://star.comptroller.texas.gov/search?doc_type_code=L&tax_type_code=SST
• Opinion: https://star.comptroller.texas.gov/view/8909L0959B01

Original ruling text

September 25, 1989

Dear ***:

Thank you for your inquiry regarding the taxability of septic and grease trap
services.

You state that you clean septic tanks for home owners and businesses and
transport the waste to the city sewer department. You also stated that you
charge a lump sum fee for your service which includes the dumping fee that you
pay. You charge tax to any business that you service. In our phone
conversation of August 18, you indicated that you transported the materials to
the City of McAllen waste plant. You also indicated that the city didn't
charge tax on the dumping fee.

Your lump-sum charge for cleaning septic tanks isn't taxable whether your
customer is a home owner or a business. Cleaning septic tanks isn't taxable
for either residential or nonresidential customers. You shouldn't charge tax
on the charge for cleaning the septic tanks, transporting the waste materials,
or the dumping fee charged by the City of McAllen.

The city's charge for dumping the septic materials isn't taxable. You don't
need to issue a resale or exemption certificate to the city.

You also state that you clean grease traps for city businesses and transport
the waste to the city landfill. You also indicated that you include the
dumping charge (i.e. the landfill fee) in the lump-sum charge on your billing
to your customer. In our phone conversation of August 18, you stated that the
waste was transported to landfills for the cities of McAllen and Edinburg.
McAllen doesn't charge you tax on the landfill fee. The City of Edinburg is
charging tax on the landfill fee.

Charges for cleaning nonresidential grease traps which are located in the sewer
line are taxable as real property repair unless the service qualifies as
maintenance under the enclosed Comptroller's Rule 3.357. In order to qualify
as maintenance, the service must be scheduled periodic work on the property
(see Rule 3.357(a)(3)). For example, charges to clean a clogged sewer line
wouldn't qualify as maintenance. If your service qualifies as maintenance, you
shouldn't charge tax to your customer. However, you must pay tax on all
taxable items used in providing your service.

If your service doesn't qualify as maintenance, you must charge tax on your
total charge to clean grease traps. All charges to clean the trap, transport
the waste, and the dumping fee are taxable.

Charges to clean grease traps which aren't connected to the sewer line (i.e.,
an enclosed system) are taxable. Your charges for cleaning the tank,
transporting the materials, and the dumping fee are all taxable. Since these
charges are taxable under the enclosed Comptroller's Rule 3.356 (Real Property
service), there is no exemption even if the services are scheduled and
periodic.

Charges for your to dump the grease trap waste at a landfill aren't taxable.
You shouldn't have to issue a resale or exemption certificate in lieu of tax if
you dump the waste in a landfill.

The dumping fee is taxable if the city provides a facility where the waste is
collected and later moved to a landfill by the city.

The opinion is based on the facts presented. If there are additional or
different facts, the opinion may change.

If you have any questions, please contact Tax Correspondence. You may call
toll free 1-800-252-5555, or our regular number is 512/463-4600. My extension
is 3-4992.

Sincerely,

Bob Jeffcoat
Tax Correspondence